Kintropy In Action

Commentary Disclaimer:  The following commentary reflects my own views on Measure 50 only.  If you are an Oregon voter, I encourage you to research the Measure yourself with the help of the offical Voter's Pamphlet and text of Senate Bill 3

Opponents to Measure 50, like the Oregonian's David Reinhard and Big Tobacco, like to point out the following:

• Yes, smoking is bad BUT
• More taxes for cigarettes suppress cigarette use
• Less cigarette use means less tax revenue
• Therefore, one should not support Measure 50, the Healthy Kids initiative, because revenue will dry up and come out of your, general taxpayer's, pocket

Additional arguments run something like a) most money will not go to the Healthy Kids program anyway, b) amends the perfect as-is Oregon Constitution, c) unfair to the smoking-addicted poor.

Alice, your mirror is ready.  Wonderland is waiting.  All you have to do is close your eyes, walk through the smokey glass, and pop out on the other side where the caterpillar puffs freely and health care is unnecessary (unless, of course, the Queen of Hearts comes looking for your head).

Back to reality:  let's start with taxes.  According to the Federation of Tax Administrators, Oregon's last cigarette tax change occurred in January, 2004; we reduced the cigarette tax per pack by ten cents to $1.18.  How much does the cigarette tax add to a pack of cigarettes in Vancouver, Washington?  $2.025 (7/1/2005).  Matching our northern neighbor doesn't seem completely out of line, particularly if it increases revenue in a state overly-dependent on a single revenue source:  income taxes.

But will Measure 50, if passed, reduce smoking rates and increase revenues?  Using data from a California cigarette tax price increase in 1999, Dr. Hai-Yen Sung summarized his team's findings as follows:

"Over the period 1999 through 2002, the combined effect was to reduce cigarette consumption by 2.4 packs per capita per quarter (1.3 billion packs total over the 4-year period) and to raise state tax revenues by $2.1 billion.... 

Conclusions. A major increase in price through taxation and the MSA provided a strong economic disincentive for smokers in a state with a low smoking prevalence. This effect could be reinforced if part of the MSA payments were devoted to tobacco control programs."  (Hai-Yen Sung, PhD, "A Major State Tobacco Tax Increase, the Master Settlement Agreement, and Cigarette Consumption: The California Experience"; American Journal of Public Health, vol 95.6, June 2005.

I wouldn't claim that Oregon is a state with a "low smoking prevalence."  Anyone who has wandered through Pioneer Square or our bars can take issue with that.  I do think, however, the report above and data from the Campaign for Tobacco-Free Kids successfully links increases in cigarette taxes/prices to a decrease in smoking frequency (at minimum) and an increase in revenue.

So now we have some new money.  Is it true that the Healthy Kids program doesn't receive every penny from Measure 50?  On this point, opponents are correct.  The Oregon Legislative Fiscal Office analysis shows that the estimated 2007-09 extra tax revenue would be $194.5 M.  Of that, the Oregon Healthy Kids Program (OHKP) would receive $133.1 M; Oregon's Tobacco Use Reduction Account, $19.5 M; the Rural Health Revolving Account, $2.1M; Safety Net Clinics, $5.6M.  In the 2010-11 period, OHKP will receive 90% of the funding in total.

Check my math.  I'll wait. 

I'll bet you found a gap of $34.2 M for 2007-09.  This is part of approximately $68 M left aside from 2007-2011 to "help safeguard the program from variations in caseloads, medical inflation, and modest declines in tobacco revenue."  Wow, the Legislators thought ahead and built in a backup plan!  This represents a giant leap forward for the give-everyone-their-money-back Kicker state. 

The pie charts on t.v., of course, don't break the data out the same way.  They fragment the OHKP, essentially arguing that expanding the Oregon Health Plan (OHP) Standard (severely contracted for years), providing partially-subsidized, private insurance options for kids living between the 150% to 300% Federal Poverty Level, supporting rural health initiatives, funding safety net clinics, and administrative costs for the OHKP have nothing to do with OHKP.  Seems like kids (or their parents on OHP Standard - see here for stats on parents with coverage and its impact on kids) might need a private insurance option, live outside Portland metro, and use safety net clinics, especially those located in and around schools. 

As far as amending the sacrosanct Oregon Consistitution? Janie Har of The Oregonian reports that we've already done that 240 times.  Given that one of those amendments was to protect the right to sell alcohol by the glass (1952), I think the Constitution will survive if we pass Measure 50.

Lastly, it is true that higher cigarette taxes will impact the poor disproportionally.  Given that

"Tobacco use cost Oregonians $1.8 billion in 2000. The direct cost to the healthcare system alone in Oregon was nearly $900 million, and every pack of cigarettes sold costs our economy $7.18—$3.45 in medical costs and $3.73 in lost productivity due to premature death and disease." Oregon Statewide Tobacco Control Plan, 2005-2010

I would hope that additional outreach can be accomplished by Oregon's Tobacco Use Reduction Account programs in all communities and economic levels.  Imagine offsetting the negative impact of smoking's health care costs by insuring more kids and increasing anti-smoking programs.  I think we can do more help than harm by raising the cigarette tax a mere $0.845 a pack, don't you?

-- Dad 

Edited for clarity on OHP Standard 10/21/07 (Dad)